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By Rotarian Mary Ruth Barnes
Director of Estate and Asset Services
American Cancer Society.
The Tax Extenders and Alternative Tax Relief Act of 2008, recently
enacted by Congress, is especially significant for millions of
Americans with individual retirement accounts (IRAs) facing year-end
tax planning.
The new law extends provisions adopted in the Pension Protection Act
of 2006, enabling donors to shift assets from an IRA to a charity
without incurring a federal tax liability. It provides taxpayers
aged 70˝ years or older potentially large tax savings, is designed
to encourage giving and fairness as Americans help each other
through charitable donations.
Donors should be aware of a couple of wrinkles in the law. First, direct transfers may
only come from donors’ IRAs – not from 401(k)s or other retirement
plans. Funds in 401(k)s and other retirement plans may be converted
to IRAs with the assistance of the plan administrator or custodian,
and then transferred to charity.
Second, before enactment of the Pension Protection Act two years
ago, donors who were older than 70˝ years had to make required
minimum distributions from their plans, whether they needed the
money or not. And prior to this law’s enactment, required minimum
distributions were taxable. Now, however, if donors make a direct
transfer from an IRA to charity, the law allows the transfer to be
considered their required minimum distribution, and it isn’t taxed.
Obviously, this provides an enormous incentive for those at least
70˝ with one or more IRAs to contribute their required minimum
distributions to support their favorite charities and avoid paying
taxes on them.
The law extends opportunities for a potentially large stream of
additional donations for
When donors decide to invest in a cancer-free future, the American
Cancer Society commits its best people and resources to research and
structure planned gifts that provide the greatest benefit and
service for donors and their loved ones. I and other directors of
estate and asset services at the American Cancer Society work
closely with donors’ financial and legal advisers to determine how
various planned giving instruments work best for each individual.
They provide helpful information while becoming part of donors’
financial planning teams.
The American Cancer Society is
dedicated to eliminating cancer as a major health problem by saving
lives, diminishing suffering and preventing cancer through research,
education, advocacy and service.
Founded in 1913 and with national
headquarters in
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New Tax Relief Act is a boon to American Taxpayers